Business entities in Oman in 2023

Healy Consultants advises our Clients on the optimum corporate structure for doing business in Oman and completes setup procedures on our Client’s behalf. Until December 2019 the most common entity type used by our international Clients was a limited liability company with an Omani, American or GCC national as passive nominee shareholder. However a new Foreign Investment Law came into effect in January 2020. While there is still no clear legal regulatory framework, the new law has eased regulatory requirements for foreign investment in the country. Over the coming months, the One-Person Company may be the best option:

• Doing business in Oman with a local entity

  • One-Person Company (OPC)

    1. As of January 2020, a limited liability company can be set up with a sole individual or corporate shareholder, a sole director and no miminum paid up share capital requirements;
    2. As of May 2020, there are only 37 business activities closed to foreign ownership. That said, over the coming months, the Ministry of Commerce and Industry (MOCI) is expected to release a new negative investment list;
    3. Best uses: An OPCis expected to become the most commonly-used entity for foreigners wishing to do business in Oman via a simple corporate structure.

  • Oman limited liability company (LLC)

    1. The new foreign investment law has abolished i) the mandatory minimum share capital requirement and ii) the requirement for an Omani, GCC or USA shareholder mentioned below, hat said, due to lack of clear regulatory framework, it is advisable to confirm the same with MOCI on a case-by-case basis;
    2. Depending on the industry sector, business activity and sizeable foreign investments, MOCI may request to follow the ‘old’ Foreign Investment Law on a case-by-case basis. According to the ‘old’ foreign investment law a local LLCis required to have i) two shareholders ii) one director (who can be one of the shareholders) iii) a minimum paid up capital of OMR150,000 (approx. US$390,000) and iv) a local address. Of the two required shareholders, one must be a national of Oman, a GCC state or the USA, and must own 30% of the company’s shares. The appointment of an auditor is also required;
    3. Since the signing of the 2009 Free Trade Agreement, US citizens are treated as local citizens and are therefore allowed to form local companies without a local partner, provided that all of the shareholders are American. For such cases, the minimum share capital is OMR20,000 (approx. US$52,000) and is not required to be paid-up;
    4. Best uses: An Omani LLC is the most commonly-used entity for foreigners that wish to do business in Oman.

  • Oman free zone company

    1. Companies incorporated in Oman Free Zones are permitted to i) be 100% foreign-owned ii) conduct business with local customers. They also have a low or no minimum paid up capital investment;
    2. Free zone companies generally require a minimum of two shareholders and are exempt from i) corporate income tax ii) custom duties and iii) have only 10% of the workforce needs to be Omani
    3. Best uses: Free zones are recommended for manufacturing or trading companies that wish to use Oman as a base to expand operations in the middle eastern region.

  • Joint Stock Company (SAO)

    1. A Joint Stock Company is formed by a minimum of three shareholders;
    2. Joint stock companies that trade their shares publicly are referred to as public joint stock companies (SAOG), and require i) a minimum share capital of OMR2 million (approx. US$5.2M) and ii) an Omani shareholder with 30% of the shares and iii) at least 40% of the shares to be offered for public subscription;
    3. Joint stock companies that do not offer shares to the public are known as private joint stock companies (SAOC), and require i) a minimum share capital of OMR500,000 (approx. US$1.3M) and ii) a 30% Omani shareholding;
    4. Best uses: We recommend registering a Joint Stock Company for projects, involving large investments of funds or raising capital.

  • Holding company

    1. A holding company is an entity that owns at least 51% of the shares in one or more joint stock or limited liability company(ies);
    2. This type of entity requires the appointment of three shareholders and a minimum share capital of OMR2 million (approx. US$5.2M);
    3. For the reasons above, holding companies are not a popular structure used by foreign investors.
    4. Best uses: We recommend registering a Joint Stock Company for projects, involving large investments of funds or raising capital.

  • Limited partnership (LP)

    1. An LP requires at least one general partner and one limited partner to be registered;
    2. The general partner is liable for the partnership’s debts to the full extent of the partnership’s investment, whereas the limited partner is only liable for the partnership’s debt based on their capital contribution;
    3. Only the general partner(s) can participate in the management of the company, and must be an Omani or GCC national;
    4. Best uses: We recommendLPs for Clients looking to establish their business in Oman to provide professional services such as accounting, auditing or fiduciary services.

  • General Partnership (GP)

    1. A General Partnership (GP) is formed by a minimum of two individuals who must be nationals of Oman or a GCC country;
    2. The partners of a GP have unlimited joint liability for the company’s debt. A GP does not have minimum capital requirements;
    3. Best uses: We recommend a GP for GCC nationals looking to supply professional services such as accounting, auditing or fiduciary services.

  • Joint Venture (JV)

    1. A JV is an internal agreement between two or more parties (individual or companies, nationals or foreigners) whereby one party performs business in his/her personal name while the profits/losses of the proceeds are shared;
    2. A JV is not a legal entity and therefore does not require any form of registration with, nor has protection from, the local Authorities;
    3. A JV agreement must remain undisclosed to third parties, or will otherwise be treated as a General Partnership;
    4. Best uses: A foreign company undertaking a specific short-term project in Oman.

• Doing business in Oman with a foreign entity

  • Oman branch office

    1. Oman’s Commercial Companies Law limits the activities of branches to government contracts or to areas economically necessary for Omani development, except if the parent company is fully owned by a GCC or US national. In both cases, branches are required to have a local agent to sponsor Oman visas and licenses;
    2. The branches are also required to obtain approval from the Ministry of Commerce and Industry (MOCI), and the license is only valid for the duration of the project. To issue an operations license, the ministry will require a bank guarantee of US$390,000;
    3. Best uses: This type of business entity is only recommended for Clients that have already secured a project contract with the Omani government.

  • Representative office

    1. While the Omani representative office is 100% foreign-owned and controlled, it is not permitted to make direct sales within Oman. Its scope of activities is limited to i) promotion of the parent company’s business and ii) market research;
    2. Representative offices must have i) at least one appointed individual representative ordinarily resident in Oman and ii) are also permitted to sponsor and hire local or foreign employees;
    3. Best uses: Representative office are recommended for Clients that wish to promote and explore the Omani market, without carrying any commercial activity in the country.

  • Commercial agency

    1. Foreign companies looking to do business in Oman that are not keen to register a local company or branch in Oman are permitted to conduct business through local commercial agents;
    2. Unlike the JV, the agreement with the local agency must be registered with the Ministry of Commerce and Industry (MOCI);
    3. Clients working through a commercial agent are still required to file annual tax returns and pay corporate income tax on their Omani income;
    4. Only Omani nationals registered with the Oman Chamber of Commerce or local entities with 51% local shareholding can be appointed as commercial agents;
    5. For the duration of the agreement, only the commercial agent is permitted to engaged directly in the sale of products and services in the country.

• Table of comparison between Oman entities

  	70% LLC	100% LLC	Free zone (FZ)	JSC	LP	Branch office	Representative office
  Type of business permitted?	All	Government contracts and MOCI approval	All	All	Professional services	Government contracts and MOCI approval	Research and marketing
  Allowed to issue sales invoices?	Yes	Yes	Yes	Yes	Yes	Yes	No
  Allowed to sign contracts?	Yes	Yes	Yes	Yes	Yes	Yes	No
  Corporate tax payable?	15%	15%	0%	15%	15%	15%	0%
  Allowed to import goods?	Yes	Yes	Yes	Yes	No	Yes	No
  Allowed to export goods?	Yes	Yes	Yes	Yes	No	Yes	No
  Wholly foreign owned?	No	Yes	Yes	No	No	Yes	Yes
  Oman bank account allowed?	Yes	Yes	Yes	Yes	Yes	Yes	Yes
  How long to open company bank account?	6 weeks	6 weeks	6 weeks	6 weeks	6 weeks	6 weeks	6 weeks
  Can rent an office in Oman?	Yes	Yes	Yes	Yes	Yes	Yes	Yes
  Tenancy agreement required?	Yes	Yes	Yes	Yes	Yes	Yes	Yes
  Can conduct business within Oman?	Yes	Yes	Yes	Yes	Yes	Yes	No
  Can apply for immigration visas?	Yes	Yes	Yes	Yes	Yes	Yes	Yes
  Can hire staff in Oman?	Yes	Yes	Yes	Yes	Yes	Yes	Yes
  Incorporation period?	4 weeks	4 weeks	6 weeks	6 weeks	4 weeks	6 weeks	6 weeks
  Shelf companies allowed?	Yes	Yes	Yes	Yes	No	No	No
  Minimum shareholders?	2	2	1	3	2	Parent company	Parent company
  Minimum directors or representatives allowed?	1	1	1	2	2	1	1
  Min capital?	US$390,000	US$1	US$1	US$1.3 mil	None	None	None
  Bearer shares?	No	No	No	No	No	No	No
  Public Relations Officer (PRO)?	Yes	Yes	Yes	Yes	Yes	Yes	No
  Public registrar of companies?	Yes	Yes	Yes	Yes	Yes	Yes	Yes
  Annual accounting?	Yes	Yes	Yes	Yes	Yes	Yes	Yes
  Corporate directors allowed?	Yes	Yes	Yes	Yes	No	Yes	Yes
  Oman resident company secretary required?	Yes	Yes	Yes	Yes	No	Yes	Yes
  Can buy Oman property?	Yes	Yes	Yes	Yes	Yes	Yes	Yes
  Need to travel?	No	No	No	No	No	No	No
  Annual Oman tax return?	Yes	Yes	Yes	Yes	Yes	Yes	Yes
  Annual audited financial statements?	Yes	Yes	Yes	Yes	Yes	Yes	Yes
  Access to Oman double tax treaties?	Yes	Yes	No	Yes	No	No	No
  Annual license renewal?	Yes	Yes	Yes	Yes	Yes	Yes	Yes
  Oman national director or shareholder required?	Yes	No	No	Yes	Yes	No	No
  Allowed own shares in other Oman companies?	Yes	Yes	Yes	Yes	Yes	No	No
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